This is a placeholder for our STIP Addendum.
Just tell me how to vote!
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Hello @SavvyDAO ,
Thank you for your application! Your advisor will be @JoJo.
Please join the LTIPP discord and ping your advisor in the general chat so they can create a new channel and start communicating with you.
ehy @SavvyDAO please join the discord and ping me there!
This is the official proposal of Savvy DAO, posted by 0xidm, a member of the team
Information about STIP/STIP Backfund
- Can you provide a link to your previous STIP proposal (round 1 or backfund)?
- How much, in the previous STIP proposal, did you request in ARB?
200,000 ARB
- What date did you start the incentive program and what date did it end?
We ended March 31, 2024; starting date was approximately January 7, 2024.
- Could you provide the links to the bi-weekly STIP performance reports and Openblocks Dashboard?
https://forum.arbitrum.foundation/t/savvy-stip-updates/21309
https://www.openblocklabs.com/app/arbitrum/backfund/grantees/Savvy
NB: OBL needs to push their dashboard or make it live; we are in touch via TG; eta was ~April 19.
- Could you provide the KPI(s) that you deem relevant for your protocol, both in absolute terms and percentage change, month over month, for the first of each month starting from October 2023 until April 2024, including the extremes?
TVL of Synthetics
| Oct 2023 | Nov 2023 | Dec 2023 | Jan 2024 | Feb 2024 | Mar 2024 | Apr 2024 | |
|---|---|---|---|---|---|---|---|
| TVL ($M) | 0.872 | 1.019 | 1.075 | 1.113 | 1.034 | 1.622 | 1.597 |
| TVL % | 0% | 16.87% | 5.50% | 3.47% | -7.04% | 56.80% | -1.54% |
- [Optional] Any lessons learned from the previous STIP round?
The previous STIP round was a major event in our timeline and there are so many learnings to share - a lot of which Alex has already given voice to. By now we’ve had the chance to observe the consequences of our initial STIP, which focused on developing Protocol-Owned Liquidity through a Bonds program. We found:
- substantial action in the Pool we targeted
- Savvy effectively re-purchased a quantity of our protocol tokens from the market
- The reduced token supply will have some effect over the long-term but, for the short term, the price action has been volatile
- We would probably use a slightly different strategy next time but it was nevertheless very exciting
New Plans for STIP Bridge
- How much are you requesting for this STIP Bridge proposal?
200,000 ARB
- Do you plan to use the incentives in the same ways* as highlighted in Section 3 of the STIP proposal? [Y/N]
No
- [Only if answered “no” to the previous question] How will the incentive distribution change in terms of mechanisms and products?
Upon the conclusion of STIP, we conducted interviews with protocol users and built a new economic model of protocol operation. Based on the results, our strategic goal for this STIP bridge is to strengthen the peg for our 3 synthetics: svBTC, svETH, and svUSD. We wish to develop long-term LP that will stay beyond the end of STIP so we are structuring these incentives to reward longer-term LP commitments.
Based on interviews, we believe there is a category of liquidity provider who does not wish to actively manage their LP position and who is willing to accept a slightly lower APR in exchange. We hope this incentives program will be attractive to this kind of LPer, who we think will also be a better community partner for the long-term health of the protocol.
The program will be structured as follows: for each synthetics pools, ARB will be used to to provide a base APR that is in line with comparable no-impermanent-loss pools. On top of the base APR, there will be a bonus that rewards LPers providing the largest proportions of the pool. To be eligible for the bonus APR, LPers must lock their liquidity during STIP and for 12 weeks afterwards. The total size of this program will be naturally capped by the target APR, which can only be guaranteed up to a certain TVL. This design is open to participation by anybody but we think it will be particularly attractive to large holders who want bluechip exposure in a safe and predictable way with also a specific guaranteed APR.
At the conclusion of STIP, if any ARB remains unused AND is not earmarked for distribution to the bonus APR program after the natural end of the STIP, it will be sent back to the DAO.
- Could you provide the addresses involved in the STIP Bridge initiative (multisig to receive funds, contracts for distribution, and any other relevant contract involved), and highlight if they changed compared to the previous STIP proposal?
The multisig is 0x210c0856cD966fB8990B062488A18De778122329
This address is unchanged.
- Could you share any feedback or suggestions on what could be improved in future incentive programs, what were the pain points and what was your general evaluation of the experience?
We’ve worked very hard to implement a data monitoring infrastructure - and for our small team, this has been a pretty heavy lift.
Overall, STIP has proven to be an amazing opportunity and it is a truly impressive demonstration of what a DAO can accomplish.
Following the ARDC recommendation, we believe that this proposed addendum requires further review by the DAO. Therefore, we challenge its optimistic approval so that the delegates can form an opinion on the merit of renewing the incentives received during the STIP.
We are publishing the review conducted by Blockworks for greater visibility and advice to the applicant to provide an explanation for the concerns raised.
“Savvy retroactively introduced a Bond program (SVY-ETH), which could be seen as selling ARB to acquire protocol-owned liquidity by some. New incentive mechanism is interesting, although not sure what consensus is around forcing users to lock liquidity to earn additional incentives. Couldn’t find readily available data on factors incentivised in the original STIP. Overall, protocol seems to be doing fine.”
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On behalf of the Arbitrum community members who delegated their voting power to us, we’re voting For this proposal.
Savvy DAO achieved solid growth in its key TVL metric during the initial 200K ARB STIP, rising from $1.07M in December 2023 to $1.60M by April 2024, a 48% increase. Notably, TVL held relatively steady even after the program ended, dipping just 1.5% from March to April, suggesting the liquidity and users attracted have sticking power.
We commend Savvy’s thoughtful approach to gathering user feedback via interviews and using those learnings alongside a new economic model to inform their bridge round strategy. The pivot from the bonds-based approach to strengthening the peg of their core svBTC, svETH, and svUSD synthetic assets demonstrates adaptability.
The proposed design of offering a steady base APR bolstered by a bonus for LPs who lock funds through the STIP and for 12 weeks after targets an important constituency - larger, less active holders seeking safe, predictable yield. Focusing on this group to establish sticky liquidity makes sense given the learnings from the initial round.
We also appreciate the built-in protection of an TVL cap beyond which the favorable APR cannot be guaranteed. This should help prevent unsustainable “mercenary” liquidity from destabilizing the program. The commitment to return any unused rewards not needed for the post-STIP bonus is a responsible touch as well.
Savvy’s transparency around the challenges of implementing robust data monitoring as a small team and overall positive experience with the STIP are encouraging. It underscores the potential for this program to help early-stage projects accelerate their development and gain traction.
The strong results from the first STIP, prudent application of learnings to the bridge design, and clear potential to establish long-term sticky liquidity from a key user segment give us high confidence in Savvy’s ability to deliver outsized impact with this 200K ARB allocation. The fact that they are requesting a reasonable repeat of their initial funding rather than an increased amount reinforces their credibility.
While we recognize OpenBlocks dashboard for tracking performance is not yet live, we feel the metrics presented and overall soundness of Savvy’s approach merit support at this stage. We look forward to monitoring their continued progress and expect them to be a valuable contributor to Arbitrum’s DeFi ecosystem.
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I’ve voted FOR Savvy DAO STIP Addendum.
NOTE: Apologies for taking so long to respond, multiple team members were out and we missed this challenge.
Why ROE and Bond program For our STIP experimentation, Savvy has taken inspiration from the “Return on Emissions” (ROE) concept introduced to us by @SeriousPeople (@SeriousTaylor @SeriousKeith @SeriousIan).
Briefly, Return on Emissions is the fraction of value retained compared to the value of ARB emitted.
Previous analysis has found that traditional Liquidity Mining incentives obtain an ROE below 10%, which inspired us to re-examined LP incentives models.
Both our previous and current STIP strategies sought to develop Liquidity using ARB incentives - but with a much higher Return on Emissions.
Results of Bond program The theoretical ROE for Savvy’s intial STIP Bond program was above 95%, which compares favorably against alternatives.
In this light, we think our previous STIP program efficiently recruited LP that stayed on-chain. Our STIP bridge design is more similar to classic Liquidity Mining incentives models - but we are leveraging the learnings from the previous STIP’s Bond program.
Protocol goals for STIP Bridge: As before, our goals are to:
- develop Liquidity
- longer-term; “sticky”
- high Return on Emissions
Good Arbitrum alignment: We believe Savvy and Arbitrum are well-aligned on maximizing ROE for the purpose of developing long-term LP, which Arbitrum can observe as the growth of on-chain TVL.
Innovative approach Ultimately, we believe our STIP Bridge proposal is a novel approach with a solid chance at achieving the efficient, sticky liquidity - and we hope the DAO will allow us to continue exploring this incentive model.
gm, I am voting AGAINST this STIP Addendum.
The Savvy TVL doubled from 0.8m$ to $1.5m from November. At the same time, the main assets (BTC and ETH) used as collateral more than doubled in price during the same time. It’s very likely that the platform saw very limited net inflow of new funds.
Their dashboard on Dune shows 1-2 daily users.
A request of another 200,000 ARB is not justified in my opinion (20% of total TVL; a lot of the projects applying for the LTIP were rejected by the council with more positive ratio).
Furthermore, as highlighted by @cattin and Blockworks, the Savvy DAO changed their strategy for their original STIP, and effectively sold ARB on Sushi to buy ETH and their SVY token.
This is how the changed was announced - I don’t think it’s a good practice.
Additionally, when you consider the research done by OpenSource Observer, Savvy has performed pretty well in " driving ecosystem growth", in the top 13 of projects driving ecosystem growth.
We vote to approve funding the protocol.
Reasoning: The incentives have clearly attracted users into the protocol and kept them in the protocol. Tweaking the mechanism via the protocol users’ interviews is sound. Concerns from the challenge don’t seem to be a blocker for an additional funding.
The Princeton Blockchain Club is voting FOR the Savvy STIP Bridge grant.
Interesting incentive model focusing on ROE, worth experimenting with more.
We voted yes on funding this due to Savvy DeFi’s approach to providing decentralized credit and their strong focus on enhancing liquidity and peg stability for their synthetics. Their strategic shift towards rewarding long-term liquidity providers is aimed at fostering sustainable growth and community partnership. Their commitment to refining their economic model based on user feedback demonstrates a proactive approach to ensuring the protocol’s long-term health, we are in the favor.
DAOplomats voted to Approve funding.
The team did well in STIP. TVL holding okay after STIP was a good sign as well and to top it off they are planning on developing long-term LP that will stay beyond the end of STIP so we should see even better outcomes with TVL levels post-STIP. Looking forward to how this plays out.
As we mentioned before, we thank SavyDAO for their transparency. The grant amount is reasonable, and as ITU Blockchain, we believe that they have fulfilled their duties so far and will continue to do so. Therefore, we have decided to approve the funding.
The report says that TVL increased from 1 to 1.5 million $
But on Defillama.com I see the opposite situation - a decrease from $1 to $700k.
I think that project asking too much, it seems to me, and they did not achieve any results with the help of the previous grant
Below are the opinions of the UADP:
We voted FOR this proposal. Savvy’s approach with ROE relative to traditional liquidity mining was an intriguing approach. The additional capital that they are requesting could interestingly be used to A-B test between the different methodologies, and the protocol’s user-centric approach is a testament to their effort in ensuring sticky liquidity, highlighted by their interview process. The ask is also not exorbitant.
For tracking purposes, I’m copying the reasoning given on my snapshot vote:
Reason: Good approach to bring users and keep them in the platform.